The Success of Market Reforms in China: Competing Paradigms of Information Economics and Neoclassical Economics

Abstract

The transition from centrally planned to market-based economies is a crucial experiment highlighting the relative merits of different economic schools of thought. This manuscript is the first one of two interconnected research papers examining this transition in different contexts: China and Russia. In the current paper, we evaluate the success of the new information paradigm applied in China. We argue that markets cannot be efficient without a role for the government, and pitting market against government is an outdated dichotomy. Public administration, government regulations and intervention, and social institutions are all impacting the efficiency of economic markets. The new information economics is important for the future of public administration.